LOWELL — This city has long been known as a haven for artists, a reputation that brings flocks of tourists to open studios and other events at its many former textile mills rehabbed into funky lofts and studios. But those artists’ work spaces are attracting attention from an unlikely and unwelcome source: the tax collector.
The Lowell Assessors Department has been sending notices — and tax collectors — to numerous arts-oriented spaces, to check on the value of the tools and materials artists use, from paint and canvas to workbenches and printing presses. Since that equipment is used in the making of products for sale, they are subject to being taxed as “personal property,” and given the number of artists working in the city, it could add up to a fair sum for the city’s treasury.
Lowell officials said taxing creative enterprises is an issue of fairness, since other businesses have to pay taxes on the equipment used in their work. And the tax bills are unlikely to be large — typically in the range of $200 a year. Nonetheless, the move is not sitting well with some artists, many of whom were drawn to the city because of its artist-friendly reputation.
“It’s kind of ridiculous,” said Derek SooHoo, a potter at the Mill No. 5 complex, recalling a recent visit from a city assessor who wanted to know how much his ragtag collection of furnishings and equipment was worth.
“Most of this stuff is donated, where I was just looking around saying, ‘Does anyone have a table?’ And all of the sudden I get taxed on that?” SooHoo said. Besides his table, SooHoo was taxed on his pottery wheel, an old couch, clay and clay-working tools, and his inventory of finished ceramics. His quarterly bills for 2017 are nearly $70.
Lowell’s chief assessor, Susan LeMay, maintains the city is obligated treat all businesses the same, regardless of their size or type.
“We’re not out to rob anyone or pick anyone’s pocket, but we think it’s a matter of fairness,” LeMay said. “If one business has to pay, they all have to pay.”
The city began sending notices in late 2016, telling artists and other tenants to file what’s called a “form of list,” itemizing their inventories, merchandise, and tools and equipment, including year of manufacture, date of purchase, and estimated market value. The forms were due March 1.
LeMay acknowledged the value of merchandise may be a fuzzy concept when it comes to artists. “Some paintings might be worth a lot when you sell them, but we’re not interested in what you’re selling them for. It’s the paint, the canvas,” she said.
On its face, the personal property tax, a companion to the real estate tax, could be applied to pretty much anything at a residence or business that isn’t bolted down. In practice, after years of court rulings and legislative changes, municipalities today impose it primarily on businesses. By far the largest payers of the tax in Lowell and elsewhere are utilities such as National Grid.
There is also a Byzantine array of exemptions: a mechanic’s or farmer’s hand tools, for example, are not taxed, but larger equipment, such as lathes and tractors, are; financial and insurance companies that pay state excise taxes are not subject to the tax at all.
Artists, a group not known for their lobbying clout, are not entitled to any exemption. But assessors in other municipalities don’t appear eager to pursue artists for money.
“We’re not taxing artists in Waltham,” said Joseph Goode, chairman of the city’s assessing department. “There are artists living in apartments doing artwork, but we don’t see anyone registering companies where we would be taxing machinery,” adding that it would probably not be worth the effort.
Some municipalities, including Boston and Brookline, exempt entities with personal property worth less than $10,000, a local option authorized by the Legislature to shield small businesses from the tax.
Lowell does not have the robust real estate values of Boston and Brookline. In many smaller, economically challenged cities such as Lowell, personal property tax collections have been growing in recent years. The tax now generates $8.4 million for Lowell, up from $6.4 million in 2013, and the tax rate — $30.64 per thousand dollars in value — is far higher than in wealthier places. In Cambridge, for example, the rate is $16.12.
While the tax bills are unlikely to be onerous for Lowell’s artists, struggling as some may be, critics say the city’s aggressive efforts are out of step with its professed support for the arts and entrepreneurship.
One persistent target for the tax collectors has been Mill No. 5, located in an area dubbed the Hamilton Canal Innovation District. Spread across two floors of an old textile mill, Mill No. 5 hosts an eclectic assortment of art studios and shops, including a cheesemaker, a record store, and myriad quirky enterprises that come and go.
“Many of these are like pop-ups, and they’re very, very small,” said Jim Lichoulas, the developer of Mill No. 5. Lowell is “spending more time and more money on just trying to track down what’s here and the changing nature of things than actually collecting.”
Lichoulas doesn’t fault the assessors for doing their job, but he questions how much thought has gone into the enforcement push. “Are we trying to encourage these small businesses?” he asked. “Are we trying to support the arts community?”
Some of the entrepreneurs have questioned the accuracy of the city’s assessments.
Evangeline Bates, whose interior design business occupies a 125-square-foot space at Mill No. 5, was informed that her belongings were worth $6,060, far more than she thought. She went to City Hall, seeking an explanation. Bates said she was told the city had estimated her bill “based on other shops” at the mill because she never sent in a form of list.
Others say the city has grounds to tax artists.
“I don’t think it’s unfair that artists have to pay a tax,” said Joe Pompei, the owner of Pompei and Company Stained Glass, at Western Avenue Studios. “If anything, I think there are times when we can be a little elitist in valuing what we create more than the average Joe down the street who is a mechanic and providing a service to clientele.”
Western Ave., as it is known, is home to some 300 studios, some occupied by long-established commercial businesses, others by artists making art in their spare time. Some of those artists also live in their studios, which makes taxing them tricky, as “household furnishings” are exempt from the personal property tax.
Antoinette Indge, a clothing designer who lives in a Western Ave. loft, is alarmed by the prospect of a tax collector coming into her home to suss out what’s taxable and what isn’t. Moreover, what is “inventory” to a tax collector, Indge said, may be a keepsake or other source of inspiration or experimentation that doesn’t get used in a finished work.
“A city that markets itself on the fact artists live here and then turns around and taxes them without consideration just isn’t taking into account the actual way artists work,” she said.